Mutualist microfinance: informal savings funds from the global periphery to the core?

221 Pages·2006·1.11 MB·English

by  Abram de Swaan & Marcel van der Linden

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Small mutual funds once flourished in nineteenth century Europe
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and North America. They still abound in Asia, Africa and Latin S
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Mutualist
America. In recent years they have come back to European and
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NorthAmericancitieswiththeimmigrantsfromtheglobalSouth. a
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Someofthesmallmutualsavingsfundsusetheaccumulatedsums &
toprovidefinancialassistancetomembersindistressandthusfulfil M Microfinance
aninsurancefunction.Othersmakeloansregardlessoftheirmem- a
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bers’individualneeds,inwhichcaseitisthesavingsorcreditfunc- c
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tionthatpredominates. l
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In this volume, five authors describe and analyse the results of a
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their fieldwork among mutual fund members in Hyderabad, Yog-
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yakarta,Ayelitsa(atownshipnearCapeTown),amongSurinamese e
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in both Paramaribo (Suriname) and Amsterdam, as well as among L
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SenegalesePeulwhomigratefromTilongetoDakarandontoParis.
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Thestudiesarebasedonfieldobservationsandpersonalinterviews. e
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Thetwoeditors,AbramdeSwaanandMarcelvanderLinden,pro- (
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videacommoncomparativeapproach,andasharedhistoricaland d
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theoreticalperspective. )
The essays explore the varieties and the logic of mutual funds,
Informal Savings Funds from
emphasizingtheimportanceof peerpressuresasa‘socialconstraint’
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to increase ‘self constraint’ on spending. Cooperation in a mutual
fund,whetherforinsuranceorsavingpurposes,canprofferthepar- u the Global Periphery to the Core?
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ticipantsadvantageswhichtheycannotrealizeontheirown.
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Abram de Swaan & Marcel van der Linden (eds)
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isbn 90 5260 183 c
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 

 
Informal Savings Funds from the Global Periphery to the Core?
Abram de Swaan &
Marcel van der Linden (eds)
Amsterdam
2005
Distributed in North America by Transaction Publishers.
ISBN90 5260 183 6
© 2005, the authors and Aksant Academic Publishers, Amsterdam
All rights reserved, including those of translation into foreign languages. No part of this book may be repro-
duced in any form, by photoprint, microfilm, or any other means, nor transmitted into a machine language
without written permission from the publisher.
Type setting & Cover-design: BoekVorm, Amsterdam, The Netherlands
Print: A-D DrukBV, Zeist, The Netherlands
Aksant Academic Publishers, Cruquiusweg 31, 1019ATAmsterdam, www.aksant.nl
Table of Contents
Preface 7
1. Mutual funds: then and here, now and there 11
Informalsavingsandinsurancefundsin
thenineteenth-century West and the present non-western world
Abram de Swaan
2. Changing interdependencies and the state 31
How financial mutuals have changed in South Africa
Erik Bähre
3. As ye sow, so ye shall reap! 67
Kasmoni in Suriname
Aspha Bijnaar
4. Tontines and village cash boxes along
the Tilogne-Dakar-Paris emigration route 97
Abdoulaye Kane
5. Social security in financial self-help organizations 121
An Indonesian example
Hotze Lont
6. Changing financial mutuals in urban India 151
Practice, functions, trust and development trajectories
Peer Smets
7. Varieties of mutualism 183
Marcel van der Linden
Contributors 211
Index 213

Preface
Mutualfundsonceflourishedinnineteenth-centuryEuropeandNorthAmerica.
TheystillaboundinAsiaandAfrica.InrecentyearstheyhavecomebacktoEuro-
peanandAmericancitieswiththeimmigrantsfromoverseas.Theprincipleissim-
ple:anumberofparticipantseachpayacontributionintothefundforasmany
roundsastherearecontributorsandateachroundoneplayerreceivesthetotalof
contributionspaidthattime.Asaresult,thosethatgetpaidoutearlyinthecycleget
credituntiltheend,thosethatreceivethelumpsumlasthavelenttheirmoneyall
thattime.Usuallycreditworthiness,prestige,privilege,need,lotteryordiscounts
determine the sequence in which the players receive their disbursements.
Thenineteenthcenturymutualfundsfunctionedalsoasinsurances,support-
ing their members in times of need with their reserves. These ‘friendly societies’
duly disappeared with the emergence of state social security and commercial in-
surance. In Asia and Africa, however the mutuals have not taken on insurance
functions.Yet,theysurviveandeventhriveamongthepoor,theworkers,andthe
middleclass,andtheyareespeciallypopularamongwomen.Againstallexpecta-
tions they are also quite wide-spread in immigrant circles in Europe, where
finely-branchedandeasilyaccessiblebankingsystemswouldseemtomakethem
superfluous.
For those who get paid out early in the cycle, the mutual is a source of free
credit.Butwhyshouldtheothersaccepttobepaidatalatestage,havingprovided
creditallalongandruntheriskthatthosewhogotpaidbeforethemwoulddefault
on subsequent payments? Where living conditions make hoarding risky and
banks seem remote or inaccessible, mutuals eliminate the need to accumulate
largesums.Assoonasitisreceivedallthemoneyispaidouttoasinglemember
whousuallyspendsitrightawayonmajorexpenditures.Nopaperwork,noper-
missions are required.
Butthereismoretothemutuals.Themeetingsareanoccasionforthemem-
bers to socialize and for the organizer to reinforce the bonds of trust and disci-
pline.Mostimportantofall,thereciprocalcommitmenthelpstheparticipantsin
keeping their resolve to save and ward off competing personal needs or claims
from relatives. Although contemporary funds have no insurance functions, they
help to strengthen the web of mutual acquaintance, confidence and solidarity
amongtheparticipants.Memberswhoseturntocollecthascomemaypassonthe
8 MutualistMicrofinance
prizetomembersinneeduntiltheirturncomesup,ortheymayotherwiselend,
orevengivethempartorallofthelumpsum.Thus,themutualsmayoperateas
an informal and ad hoc insurance scheme among peers.
Inthisvolume,fiveauthorsdescribeandanalyzetheresultsoftheirfieldwork
amongmutualfundmembersinHyderabad,Yogyakarta,Ayelitsa(atownshipnear
CapeTown),amongSurinameseinbothParamaribo(Suriname)andAmsterdam,
aswellasamongSenegalesePeulwhomigratefromTilognetoDakarandonto
Paris. The studies are based on field observations and personal interviews.
The two senior authors and editors, Abram de Swaan and Marcel van der
Linden,fromtheoutsetprovidedacommoncomparativeapproach,asharedhis-
toricalperspectiveandatheoreticalframeworkthatgoesbacktoDeSwaan’searlier
workonwelfarearrangementsintheU.S.andEuropeduringtheModernEra:In
care of the state (Polity Press, Oxford, 1989). The chapter on nineteenth century
mutual funds contained an analysis of the dilemmas confronting these small,
autonomousassociations.Astheydoatpresent,atthetimealso,peerpressuresin
thesemutualfundsfunctionedasa‘socialconstraint’toincrease‘selfconstraint’on
spending.Suchgrouppressuresalsobolsterthemembers’defenseagainsttheclaims
fromrelativesupontheirearningsandsavings,especiallyprotectingwomenfrom
thedemandsbytheirmalerelatives.IntheIntroductorychaptertothepresentvol-
umeDeSwaanelaboratesonthesethemesandsuggeststhatmutualschemespro-
vide their members with a ‘proportional liquidity sequence’ that allows them to
meettheirperiodicalneedsforcashwiththepayoffsfromthefund.Thisbroader
perspective, thematic, spatial and temporal, is taken up again in Marcel van der
Linden’sconcludingchapter.
Theotherauthors,sociologistsandanthropologists,asPh.D.studentsalldid
extensivefieldworkandwrotetheirdissertationswiththeseniorauthors.Inthis
volume they sum up their results in the perspective of the common framework
and the findings of their colleagues.
ErikBährestudiedmutualfundsinablightedtownshipnearCapeTown,South
Africa, after the demise of the Apartheid regime. Where once mostly migrant
malesrantheirmutualschemes,increasinglywomensetupmutualsoftheirown
andintheprocesscementedrelationsamongmembersofthesameneighborhood,
the same kin and village origin.
Inherresearchonthe‘kasmoni’ofSurinamesebothinParamariboandinthe
AmsterdamBijlmerareaAsphaBijnaardemonstratedhowthesemutualsservedto
increase the resolve to save through reciprocal pressure. The presence of a well-
developed and highly accessible banking system in the Netherlands did not
diminish the readiness to ‘play’ in the mutual funds.
SenegalesemigrantsfromoneandthesamevillagewhonowlivedinDakaror
had travelled on to Paris (and even New York) were the subject of Abdoulaye
Kane’sstudy.Their‘tontines’andvillageassociationstravelledwiththemandkept
going through rather forceful peer pressures: faxes and e-mail served to remind
newly arriving youngsters to join their fellow migrants and to fulfil their duties
toward their home village.
Preface 9
Mutual funds flourished in Yogyakarta, as Hotze Lont found in his research
there,inthemarginofofficiallysponsoredself-helporganizations.Explicitinsur-
ance schemes turned out to be almost completely ineffective, but the informal
mutualsfunctionedtoincreasetheparticipants’securitythroughacomplexchain
of informal coping strategies of ‘filling one hole with another’.
ThisflexibilityofthemutualfundsalsoisthemainthemeofPeerSmets’con-
tribution on rotating saving associations in India, where they could be seen to
adapttotheirmembers’fluctuatingcircumstances,tochangesinneighborhoodor
workplace composition and to changing political regimes or economic cycles.
Inhisconcludingchapter,MarcelvanderLindenpresentsawidearrayofhis-
toricalandanthropologicalevidencefortheimmensevarietyofinformal,collec-
tivesavingandcreditarrangements.Heclarifiestheterminologyandproposesa
more fundamental typology. This allows for a comparative analysis of threats
(internal and external) and securities (rules for member selection, monitoring,
andsanctions),thetwoessentialfeaturesofallmutualarrangements.
Aprojectsuchasthiscannotdowithoutsupportfromoutside.Financialaidcame
fromgrantsbytheVSBFoundation,theRoyalNetherlandsAcademyofArtsand
Sciences(KNAW),theNetherlandsresearchfoundationforthetropics(WOTRO),
thedirectoratefordevelopmentcooperationoftheNetherlandsMinistryofFor-
eignAffairs(DGIS),andtheFreeUniversityofAmsterdam.Intellectualhelpcame
from many sides: Robert Ross was co-supervisor for Eric Bähre, Peter Geschiere
forAbdoulayeKane,FransHüskenforHotzeLont,andthelatePeterKloos,the
lateJanvanderLinden,IsaBaudandOttovandenMuijzenbergsupervisedPeer
Smets. Of course, the scholarly community of the Amsterdam School for Social
Research (ASSR) over the years and in many seminars greatly contributed to the
ideasinthisbook.OrganizationalandtechnicalassistancecamefromJoséKomen
and Hans Sonneveld, also of the ASSR, and Marianne Bernard, secretary at the
UniversityProfessors’office.Thetranslators,finally,helpedtoliftthistextacross
thelanguagebarrier:BeverlyJacksontranslatedthechapterbyAbramdeSwaan,
Lee Mitzman translated the chapters by Bijnaar and Kane, Stijn van der Putte
translatedthefinalessaybyMarcelvanderLindenandPhyllisMitzmandidthe
final corrections for the other chapters.
But the greatest input, of course, came from all those people who let the re-
searchersinonamostprivateaspectoftheirlives:theirfinancialdealingswithone
another,theirsavingandtheirspending,andalltheideas,sentiments,deceptions
and expectations that came with it. It is to them that this book is dedicated.